Japan Targeting Banks Involved in Yakuza Loans Scandal: Mizuho in the Firing Line

Japan Targeting Banks Involved in Yakuza Loans Scandal: Mizuho in the Firing Line

Hiroshi Saito and Pierre Leblanc

Modern Tokyo Times

The banking and finance sector, irrespective if Western banks, Islamic banks, and so forth, is open to major scandals based on the very nature of this sector. Negative areas like money laundering for criminal syndicates, terrorist organizations, internal abuse of profits, insider dealings, mismanagement – and so on – is part and parcel of the mass ineptitude which often brings this sector into disrepute. Indeed, the banking sector is often bailed out by national governments because of an array of factors therefore various types of scandals involving the banking and finance sector is second nature. Therefore, the ongoing yakuza banking scandal is part of a long international line of serious issues involving the banking sector.

Taro Aso, the Finance Minister of Japan, praised Shinsei Bank for coming clean about a subsidiary being involved in the ongoing yakuza scandal. Shigeki Toma, President of Shinsei Bank, commented that “Our internal controls were not strict enough.”

Of course, while not denying the sincerity of the words of Shigeki Toma, it still raises the question that did Shinsei Bank genuinely come clean or did they fear being outed first? Currently, this is not clear but at least Shinsei Bank isn’t in denial mode unlike other institutions in this sector. For example, Mizuho Bank tried to brush the yakuza banking scandal under the carpet and in this context Shinsei Bank is much more transparent.

Aso strongly rebuked Mizuho Bank when their executives tried to plead innocence about not knowing about underhanded loans going to yakuza syndicates. At first Mizuho Bank was in denial mode but once the scandal became uncovered then clearly they didn’t have a leg to stand on. Despite this, the usual fudge was given by Mizuho’s lawyers because it is claimed that the yakuza scandal is based on senior executives not stopping this because of lack of interest.

Lee Jay Walker at Modern Tokyo Times states “In other words, executives from Mizuho Bank are claiming that they should be exonerated for not colluding with yakuza syndicates despite knowing that deals were going on. Their escape clause is that senior management was not interested in dealing with the issue. Of course, this doesn’t wash and if executives at Mizuho are not interested about criminality then why are they in such senior positions in the first place?”

AFP-JIJI reports that “The watchdog’s probe was announced a day after a panel of lawyers hired by Mizuho said the bank’s executives knew it was doing business with gangsters but failed to stop the practice out of lack of interest. The panel also said it found no evidence the bank was colluding with yakuza.”

In September it emerged that approximately $2 million dollars entered the coffers of the yakuza via the Orient Corp subsidiary of Mizuho. Yet, given the lack of interest by senior management in relation to this scandal then will other dirt be uncovered in the near future?

The yakuza is mainly involved in white-collar crime, the sex trade, extortion, property bribes, narcotics and other areas of criminality. It must be stated that the drug issue in Japan is milder than nations like America, Iran, Pakistan and the United Kingdom. However, the criminal activity of the yakuza is an area of concern for the Japanese government but clearly this issue isn’t anything new. Likewise, the current yakuza scandal within the banking sector is not unexpected given the power of this criminal organization which is splinted into various powerful syndicates and lesser syndicates.

It is known that the FSA will also look into the parent company of Mizuho Bank therefore Mizuho Financial Group will come under close scrutiny. Similarly, other major companies like Mitsubishi UFJ and Sumitomo Mitsui will come under the microscope. The ongoing yakuza banking scandal is nothing new because authorities have been fighting against this issue for decades.

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